What Are We Looking For?
In today’s dynamic investment landscape, U.S. technology companies are drawing attention, especially those demonstrating strong earnings and impressive revenue growth. Recent observations indicate that tech shares are on a roll, with the SPDR Select Technology Sector fund ETF (XLK) leading the pack, showcasing an impressive 26.68% return over just three months. This article dives deep into the technology sector, employing Trading Central’s Quantamental Factor investing framework to pinpoint top-rated U.S. tech stocks that are enjoying upward momentum in both price and earnings.
The Screen
To refine our search for compelling investment opportunities, we established a set of criteria aimed at identifying more established players in the tech field. Setting a minimum market capitalization at $5 billion was our first step, effectively filtering out smaller, potentially more volatile companies.
Next, we focused on stocks exhibiting accelerating earnings momentum. Specifically, we looked for earnings per share (EPS) and revenue growth exceeding 10% in the most recent quarter compared to the same period last year. This ensured that the companies we identified not only had robust financial health but were also positioned for continued growth.
Finally, we utilized Trading Central’s Quantamental rating system, which assesses stocks on a scale from 0 to 100—with 100 reflecting the most bullish outlook. Our selections were restricted to stocks scoring at least 50 in both the Momentum and Growth factors, allowing us to hone in on truly exceptional candidates.
To provide additional context, we’ve also included each stock’s recent price movement, along with their returns over the last four weeks, year-to-date, and over the past year.
More About Trading Central
Trading Central holds a prominent position as a global leader in financial market research and investment analytics, catering to both retail brokers and institutional investors. The firm’s product suite delivers actionable trading ideas founded on both technical and fundamental research across various financial instruments, including stocks, ETFs, indices, forex, options, and commodities. Their Strategy Builder, which features an advanced stock screener, is widely available through leading retail brokers in Canada and beyond.
What We Found
Our screening process yielded a list of stocks ranked based on an average score across all criteria. The standout performers include:
Seagate Technology
Seagate Technology, a titan in the data storage industry known for its hard drives and storage systems, topped our list. Recently, the company reported 30.5% revenue growth and a staggering 1,208% increase in EPS. With momentum and growth factor ratings of 72 and 90, respectively, Seagate boasts an impressive 64.4% return year-to-date and a 33.1% increase over the past year.
Palantir Technologies
Next up is Palantir Technologies, recognized for its big data analytics software, serving various sectors from government to healthcare. The company achieved a remarkable 39.3% revenue growth and doubled its EPS in the latest quarter. With its momentum rating at 91 and growth rating at 57, Palantir has surged 90.4% in year-to-date returns and an astonishing 403.6% increase over the previous year.
Uber Technologies
Uber Technologies, widely known for revolutionizing ride-hailing and food delivery services, also made our list. The company reported 13.8% revenue growth alongside a 386% increase in EPS in their last quarter. With Trading Central ratings of 72 for momentum and 82 for growth, Uber’s stock has climbed 53% thus far this year and 39.5% over the past 12 months.
Nvidia
Nvidia stands out as a leader in graphics processing units (GPUs) and AI infrastructure. Recently, it became the first company to surpass a $4 trillion market capitalization, largely due to high demand for its AI chips and software. Nvidia reported 69.2% revenue growth and 26.7% EPS growth last quarter. Its Trading Central ratings are 59 (momentum) and 76 (growth), delivering 17.8% returns year-to-date and a 20.7% gain over the last year.
Trading Central’s Strategy Builder also offers a backtesting feature, allowing investors to evaluate the effectiveness of their strategies over time. Analysis over a five-year historical period with quarterly rebalancing shows that the strategies derived from the criteria described here resulted in an impressive 32% annualized total return, significantly outperforming the 14% return of the Nasdaq Composite Index.
The investment ideas highlighted here are purely informational and should not be construed as financial advice or recommendations by Trading Central regarding financial instruments. Investors are encouraged to conduct their own research before making investment decisions.
Gary Christie is the head of North American research at Trading Central in Ottawa.
